The European Central Bank published the account of its September monetary policy meeting, showing that all Governing Council members supported raising the three key interest rates by 25 basis points, including an increase in the deposit facility rate to 2.50%. Members judged that the Middle East conflict and developments in Russia’s war against Ukraine had made the energy shock more persistent, keeping inflation above target for longer, while the euro area economy remained resilient enough to absorb higher rates. Staff projected headline inflation of 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with the latter two forecasts revised higher. Core inflation was expected to remain above 2% throughout the projection horizon. Although underlying inflation remained contained, wage growth was moderating and no material second-round effects had emerged, members saw inflation risks as tilted to the upside because of possible further energy disruptions and stronger pass-through to other prices and wages. The Governing Council retained a data-dependent, meeting-by-meeting approach and avoided signaling whether the increase was part of a continued tightening cycle or the final rate rise.
European Central Bank account shows unanimous support for 25 basis point rate increase as energy shock worsens inflation outlook
The European Central Bank’s September meeting account showed unanimous support for a 25 basis point rate increase, taking the deposit facility rate to 2.50%. A more persistent energy shock had worsened the inflation outlook, although underlying inflation remained contained and no material second-round effects had emerged. Future decisions will remain data-dependent, with no signal on the direction of the next move.